Bailout Watch 268: Car Czar Named
Wow, that was quick. Even before we could get a hold of the new bailout bill, the name of the new “viability advisor” has emerged from the political fug hanging over Washington. And the man who will control the fate of America’s automakers is… Kenneth Feinberg. The MSM (e.g. AP) is touting the man who would be Czar as the “the lawyer oversaw the federal Sept. 11 victims’ compensation fund” (AP). Which is a strange, deeply foreboding background for this gig if you ask me. But you didn’t. So I asked Wikipedia to give me the inside dope on El Czarino. “Originally from Brockton, Massachusetts, he worked for five years as an administrative assistant and chief of staff for U.S. Senator Ted Kennedy, and as a prosecutor for the U.S. Attorney General. Before founding his own firm, The Feinberg Group, in 1993, he was a founding partner at the Washington office of Kaye Scholer LLP.” Feinberg wasl also a key figure in other major compensation disputes, including the use of Agent Orange in Vietnam and the Dalkon Shield birth-control device.
More by Robert Farago
Comments
Join the conversation
Jack Welch? Probably wouldn't work for a dollar a day though.
This guy actually came to speak at my law school - he was (or at least came across as) thoughtful and mindful of big-picture consequences. Here's hoping that he doesn't cave in.
Step back for a second, folks. The government loan terms are very similar to what occurs in a Chapter 11 bankruptcy. In Chapter 11, the filing company is supposed to put together a business plan, and a sufficient number of creditors need to agree to new repayment terms, otherwise it goes into Chapter 7 liquidation. So you need to look at other aspects how Chapter 11 works in order to understand what is going on here. During a Chapter 11 proceeding, the court will appoint a "receiver" who is in theory a neutral party, but who in practice was probably selected by the largest creditors and who's job is to make sure that the borrowers get as much as possible. Feinberg is playing the role of a receiver in this not-quite-Chapter-11 petition. As is the case with a bankruptcy receiver, they are often attorneys, not industry experts. Their jobs are to have a BS detector that they use to protect the lenders. A problem with appointing industry experts in this case is that the relationships are so incestuous that you might end up with conflicts of interest. You don't want Bob Lutz's friends doing this job; you want outsiders who will not fall for their excuses and demand a workable plan for repayment. At this point, the government cannot expect to be repaid what it is going to be owed. There needs to be someone to protect the government from these bozos in Detroit who would default on loans from their mothers if given half a chance. My hope is that he is a first-class jerk that makes them regret the day that they decided to fly to Washington with their hands out. This experience really needs to suck, so that no one else in Corporate America is inspired to follow in their footsteps.
It's hard to tell whether not being a car guy is good or bad. One of the not entirely unsung but still often overlooked businessmen, Ely Calloway, is a good example. His career was in textiles and wines. He was 63 when he bought an interest in a tiny club manufacturer named Hickory Sticks and changed the name to Calloway. Although he had always played golf, he had never run a company producing golf products. So, not having been 'in' the industry, in the strictest sense of the word, might not be a bad thing.